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It is now clear that the main cause of the euro crisis is that the member states surrendered their rights to print money to the European Central Bank when the single currency was created by the Maastricht Treaty in 1992. They did not realise what that entails; neither did the European authorities.

When the euro was introduced European regulators allowed banks to buy unlimited amounts of government bonds—the sovereign debt of each country—without setting aside any equity capital to protect them against the risk of default. The European…

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